How To Do Less While Making More
“Here is an interesting interview with a business owner who explains the difference between recurring revenue and re-occurring revenue. There is a big difference to buyers and how they value your business,” states Sam Thompson, a Minneapolis business broker and president of Transitions In Business. “The discussion also explains the selling process with Indications of Interest (IOI’s) and Letter of Intents (LOI’s) and when they are used”.
Aater Suleman co-founded an IT services company called Flux7 in 2013, built it to 70 employees and sold it in 2019 to NTT DATA, the Fortune 500 IT giant.
If you’re in the process of re-structuring in the wake of the new COVID-19 reality, Suleman’s story is rich with insight. It provides a number of lessons for any value builder with two significant themes emerging:
Do One Thing: Suleman and his partner started as “two smart guys with laptops” and would take any project. The partners quickly realized they needed to focus and become the best in the world at one thing. They decided on becoming experts in helping companies migrate their technology to Amazon Web Services (AWS). This focus created a domino effect where the more they concentrated their marketing, the more they attracted customers interested in AWS. They were able to say no quickly to wrong fit customers, reserving their sales resources for people who wanted to leverage AWS. They also found the focus accelerated their referrals, which in turn fuelled their growth.
Document Your Process: Once Suleman decided to focus on AWS, they wrote down their five-step process, which gave customers the confidence that they had a methodology. Having a process also gave Flux7 a point of differentiation (we call it “Monopoly Control”), which Suleman credits with accelerating their growth dramatically.
This episode is jam-packed with insight, including:
- Why brainstorming a business idea is a fool’s errand
- Why you’re more likely to drown in abundance than starve out of scarcity
- Why customers prefer you to have an opinion
- The desperation index and how Suleman used it to choose customers
- The ideal vs. acceptable customer
- How to apply a “fit score”
- The bowling alley strategy and how to use it
- How an hourglass may be the perfect visual analogy for a successful start-up
- The difference between re-occurring and recurring revenue (both are good!)
- The secret to a successful partnership
- Preferred vs. Common shares
- The payout waterfall
- The secret Suleman learned after negotiating 400 + contracts
- The power of LinkedIn for attracting acquirers
- The difference between an IOI and an LOI
- Why a plan may be worthless yet planning may be essential